A payoff table organizes decision alternatives by rows and states of nature by columns, recording the payoff for every combination. Values may represent profits, costs, or utility. It supports decisions when external states cannot be controlled and their probabilities are unknown or unestimated. section 10.1.1
Construct a payoff table by:
- Listing the available decision alternatives, with exactly one ultimately selected. section 10.1.1
- Identifying possible states of nature that remain outside the decision-maker’s control. section 10.1.1
- Recording the payoff for each alternative–state combination, then applying an appropriate decision method. section 10.1.1
Investment alternatives
A pandas DataFrame can store four investments as rows and Strong Economy and Weak Economy as columns. Applying the Maximax method adds each row’s largest payoff; Stock Market leads with a highest payoff of 100,000. section 10.1.1
>>> import pandas as pd
>>> payoff_table = pd.DataFrame({
>>> 'Investment Alternatives': investment_alternatives,
>>> 'Strong Economy': strong_economy,
>>> 'Weak Economy': weak_economy
>>> })
>>> print(payoff_table)
Investment Alternatives Strong Economy Weak Economy
0 Stock Market 100000 -120000
1 Professional Soccer Club 60000 -20000
2 Stock Market / Soccer Club (50/50) 80000 -70000
3 Savings Account 35000 35000
Inspect a concrete pandas payoff table containing alternatives, economic states, and their associated values. section 10.1.1
